The Australian dollar declined against the U.S. currency after Slovakia’s ruling coalition failed to end a dispute over participation in a euro-area bailout fund, damping demand for higher-yielding assets. The New Zealand dollar fell against most of its 16 major peers after government financial statements showed the nation’s budget deficit was wider in the fiscal year ended June 30 than earlier forecast. Losses were limited for the South Pacific nations’ currencies as Asian stocks gained. “Risk-correlated currencies could trade sideways over the next month as we wait for more positive developments out of Europe,” said Roland Randall, a strategist in Singapore at TD Securities Inc., who expects the Australian dollar could fall as low as 92 U.S. cents. “A bigger budget deficit does weaken the outlook for New Zealand at a margin and therefore make it more vulnerable to rising risk aversion.” Australia’s dollar declined to 99.49 cents at 5:33 p.m. in Sydney, from 99.88 in New York yesterday. It dropped 0.4 percent to 76.30 yen. New Zealand’s dollar slid 0.3 percent to 78.15 U.S. cents. The so-called kiwi lost 0.3 percent to 59.94 yen. The MSCI Asia Pacific Index of shares advanced 1.8 percent. The Standard & Poor’s 500 Index of equities climbed 3.4 percent yesterday, while the MSCI World Index gained 2.7 percent. The leaders of the four governing parties of Slovakia, the euro region’s second-poorest member, will meet again today to discuss how to proceed with a vote on the euro-area bailout fund scheduled for a parliamentary session starting four hours later, Premier Iveta Radicova told reporters. Slovakia is the only euro-area country that hasn’t ratified the rescue measure. Budget Deficit New Zealand’s deficit widened to a record NZ$18.4 billion ($14 billion) in the year through June, from a NZ$16.7 billion estimate in the May budget, according to government financial statements released today in Wellington. “There’s plenty of belt tightening to come over the next three or four years,” Finance Minister Bill English told reporters in Wellington. “The squeeze is coming harder on the public sector. I would expect job numbers will continue to shrink because the budgets are going to get tight.” The so-called Aussie earlier rose above parity with the greenback before a government report this week projected to show Australian employers added jobs in September and after a private report showed the country’s business confidence strengthened last month. Australian Jobs “A strong number in the Australian jobs report could be a boost for the Aussie in the near term because of its implications for interest rates.” said Derek Mumford, a Sydney- based director at Rochford Capital, a foreign-exchange and rates risk management firm. Australian employers added 10,000 jobs in September, after cutting 9,700 positions in August, the statistics bureau will probably say on Oct. 13, according to the median forecast of economists in a Bloomberg News survey. The nation’s business confidence strengthened in September by the most since January, according to a National Australia Bank Ltd. survey of more than 400 companies from Sept. 26-30 released in Sydney today. To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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